In a historic move towards liberalization of the financial sector, the International Financial Services Centres Authority (IFSCA) has released an important circular that radically simplifies the manner in which Indian residents can hold foreign currency accounts. In a notification dated August 13, 2025, Indian residents can open foreign currency accounts with International Banking Units (IBUs) without any consent.
This step changes the framework of the Foreign Exchange Management Act(FEMA) and gives individuals and businesses additional methods and options to manage their international finances effortlessly

Unpacking the Change: What the Circular Says

The crux of this regulatory update rests in the clarification offered by the IFSCA. The circular titled "(e-file No. IFSCA-FMPP0BR/4/2024-Banking" specifies that foreign currency accounts opened with International Banking Units located in India’s International Financial Services Centres (IFSCs) will now be included in the definition of a foreign currency account with a bank outside of India. In the past, opening a foreign currency account for a resident Indian was more limited and generally required specific permissions under FEMA, 2015. By including IBUs, the IFSCA has created a more accessible and efficient domestic route for international banking, and is effective immediately meaning IBUs to be able to offer these services immediately.

What This Means for You: The Practical Implications

This is more than just a process change; it’s a real improvement with real advantages.
● For Individuals: For residents with international indebtedness—whether related to overseas investments, children’s education overseas, or the costs of travel, accessing funds is a little simpler. For the first time, an IBU will permit the opening of an account containing and transacting in the specified foreign currencies, without the complexities associated with traditional approvals.
● For businesses and corporates: this has unapparelled transformational potential for companies involved in international trade and services. To be able to open foreign currency accounts with an IBU simplifies treasury management, ensuring that exporters have one less challenge to confront, expands efficiency of overseas expenditures and reduces the compliance and administrative burden on companies to facilitate growth.

A Step Towards a Global Financial Hub

The IFSCA's progressive move strengthens its commitment to develop GIFT city as a premier international financial hub. By aligning domestic regulation with international standard and facilitating international banking for Indians, the authority is enhancing the desirability and functionality of IBUs.
This will encourage greater foreign currency deposits into IFSCs and generate a huge enhancement to the banking ecosystem. This move fits neatly within the greater agenda of positioning India as a better connected and competitive global financial player.
With so many regulatory changes it is hard to keep in mind the best options for you. To discover how you can best take advantage of this new regulation for your needs, please visit FEMA Consultant and contact our experts for customized advice.